Investment Q&A

Q: If you believe that the AI bubble will burst this year how might you position your portfolio to profit? I imagine picking defensive names, not owning companies with direct AI exposure, and owning precious metals is a start. If the bubble burst I would assume this would trigger a broader market selloff so not sure if there is a lot of places to hide. Would you consider any Put option strategies? Are there any other sectors/companies that would actually benefit from the bubble bursting? Thanks

Q: Which 10 Canadian or US companies are most attractive for a +5 year hold? In order ideally

Also, what one thing is worrying you most about current market conditions? And why

Thank you

Q: I was watching Blake Hilgemann talk about his 'descent' portfolio which he says has a safe 6% withdrawal rate for retirement vs the standard 4%. It's made up of 15% gold, 15% LT Bonds, 10% Utilities, 10% Real Estate, 20% Large cap stocks, 20% small cap value stocks, and 10% international stocks. Wondering what your take is on this. Also not sure how one's house factors into this...is it part of the RE % (likely more than 10%).

Q: How do I access you AI Compute Stack article from January 15?

I have found the article but I can only access it if I subscribe. I am already a member. This is an important article and I would like to read it again.

Judith

Q: Hi,
A few days ago I asked for 5 CAD and US value stocks. Thanks for that.
You mentioned that there are others that you like in the space but did not fit the criteria. Would you please share think names.

Thanks and have a great day.
Joe

Q: What does the term “correction” mean when used to describe drops in the market like the one we are now experiencing, for example? If it means that prices were too high and the correct price is now in place, why would we expect stock prices to return to the old “too high” prices? Or is that only a few stocks were overpriced and in need of correcting but everything gets caught in the downdraft? To me it seems that stocks are simply dropping in price!

Appreciate your insight.

Paul F.

Q: Hello
I enjoy reading questions from members and your responses and great service. What would be your top 3 Canadian industrials, tech and consumer disc. In order for each category.
Thanks a million

Q: Hi, Sorry there are lot of companies listed but in summary this is three part question:

1. I have BAM2%,BN9%,BEP5%. I was thinking of putting new money to KKR or BX or APO. Should i add new money to existing positions or to new positions. Which one and approx. price please.

2. All the listed are in red in various taxable and registered accounts. Which one is good candidate for new money , which one would be sell and hold.

3. ISRG is at 1.5%. Should i go to 5% in one shot or go slowly or just hold on . This is in taxable account.

Thanks

Q: Now we have large cap companies taken down 10 to 20% if earnings top but guidance is not good enough for the analyst, i do not think it is the retail investor causing these drops, so what is the major concern of the big boys that they want out of these stocks, i know that they have made money on them but where does the cash go, are they just nervous like the little guy and want out.
Thanks Again

Q: Good day,

Wild few days in the market. As a stroke of luck, I transferred one of my managed accounts over so I could manage it myself, and that sale happened early last week and it is sitting in my account, ready to deploy. As a lucky tailwind, I don't want to squander it. Mostly in RRSP account.

Would you be adding to CLS, BAM, SHOP, TVK, PNG, ZDC right now? In order of priority please with a small 'why'.


I had purchased some AEM 1-2 years ago (great recommendation, thanks), and it has flown. Is it an add now and/or are there other Materials tickers you would suggest? Doesn't have to be precious, as long as they are executing well and have quality assets and a solid runway. maybe 1-2 each for precious, critical, and non-precious?

I sold TOI last summer, and with this crazy "Software off" cycle here, would you start accumulating? like 20 or 25% of a position? Is TOI the most likely candidate to return to its growth trajectory when the world begins to appear normal again?

Thanks for Everything!

James

PS. While looking at all my statements while transferring over to Questrade for their cashback promotion, my statements had my annualized returns calculated over 1 3 5 and inception. Since inception was 21% which I'm staked about, but my 3 year annualized was 43% !!! I just renewed my 4th year with 5i. Thanks Thanks THANKS!

Q: Hi Team,
So; another brutal day for tech. My portfolio is tech loaded with many of 5i favourites. At this point my portfolio is down 18% from October’s highs. Whats your sense on what to do going forward? Hold the line and wait for a hopeful recovery? Add to highest conviction names that are down big? Or sell off some of these holdings and attempt to diversify into metals or something that has moment? My strategy in 2022 was to add to quality such as nvda and shop which paid off well, but now I am quickly almost in the same boat again it seems as 2022 sell off being Csu family heavy , shop , Rddt, gsy , Prl , Srad, Geni , Nvda to name a few weak performing holdings as of late . And standout buys today that are sticking out to you?

Thanks for the advice ,

Shane

Q: - My current portfolio sector breakdown is as follows: 20% tech, 10% health, 20% Financial, 7% utility, 15% energy, 5% consumer staples, 12% industrial, 6% real estate, 5% basic materials. Do you think that any of these are significantly over or under weighted? Includes US and Can equities.

Q: Your thoughts on this tech sell off - getting ugly for Software especially- what could turn this market around. ae we getting close to capitulation iyo?

Q: My question is: How does one decide it is time to re-evaluate and take steps to reduce market exposure? This is unique to each investor I believe.

The Substack link provided in response to Sandra’s recent post mentions the importance of institutions in the proper functioning of modern capital markets.
It states:

“ What matters is the health of the institutions that underpin economic predictability.

The institutional failures with the clearest financial relevance are well documented:

1)Erosion of judicial independence and contract enforcement
2)Politicization of regulatory agencies and central banks
3)Suppression or distortion of economically relevant information
4)Concentration of discretionary power in the executive without meaningful legislative or judicial constraint
5)Arbitrary property reallocation or expropriation and
6)Absence of durable mechanisms for accountability or peaceful policy reversal. “

In my opinion, every one of the listed“institutional failures” has happened to some degree.

As such I’m reconsidering my exposure to the equity and bond markets at this time.
Yes, corporate profits look good.
Yes, interest rates have fallen.

But the reality is markets need robust and stable institutions and these are currently facing great risks. Not to be dramatic, but these are the fundamental underpinnings of modern capital markets that are shifting. I’ve never experienced a massive drawdown.

I realise time in the market is what matters, but I’d rather miss some returns than weather the shock of a 10 or 20 point drop (or more). I think I have answered my own question: Things have changed for me (my view of the current stability of the institutional landscape) while my equity exposure has steadily increased. Yes, emotions and investment decisions can be terrible together.
But 2nd question —what’s the difference between an emotion and a comfort level?

I’m sure I’m not alone in feeling this.

Q: Hi, I'm reading that heavy truck sales have dropped significantly year over year - about the same as they did during Covid. I've understood this is a recession signal of sorts, because it acts as confirmation that buying of goods has slowed enough to be affecting shipping. Is this a reasonable assumption? If so I would welcome any comments and thoughts you might offer. If not, please feel free to correct any misunderstanding I have regarding this. Much appreciated!
D

Q: Many markets around the world have outperformed the US market in the past year. Do you feel that investors have had enough of the KING and are looking elsewhere
to invest. Maybe that is why GOLD is rising.
Thanks again

Q: Hi 5I. Would you support a reversion from growth to income (divie stocks) while we wait out a return to geopolitical stability or do you think we are in a temporary market decline and there are more legs on growth, in particular, the AI boom?

Carl

Q: What do you make of the markets today? Tech, gold, silver, metals, and cryto really getting hammered. Is this a result of these specific sectors just running too hot, as well as disappointing MSFT earnings, slowing growth and larger cap ex. Aside from MSFT, META had larger cap ex and the stock got rewarded for larger rev guidance. We can see how these tech companies will get punished on less than above average earnings and guidance. Is this market priced to perfection and expectations are just too high? Is it time to raise more cash and be defensive?

What do you think of the comments below from Powell and Macquarie and the potential for US rate hikes within the next year? We know markets are forward looking and are they expecting this potentially later this year? We all know Trump wants to appoint a dovish Fed chair after Powell. If we do expect rate hikes, this would of course take the air out of tech, risk assets, gold and silver. I hold many growth names that you mention and would like to limit the drawdown.

Lots to unpack here, but what would be your assesssment for the remainder of the year. Thank you!


**U.S. central bank chief Jerome Powell described as a solid economy and diminished risks to both inflation and employment.

**"While the outlook remains uncertain, particularly given the appointment of a new Fed Chair in coming months, our baseline remains that the rate cutting cycle is complete, as labour improvement lies ahead," said David Doyle, head of economics at Macquarie Group.

Q: Hello Team 5i & Everyone,

Thank you for your answer about Palantir’s tech. That was a lot more straightforward than what google was offering.

I’ve observed a few Germans (who have obviously grown up in an education system that does an exceptionally good job of teaching them about their own history) comment that they recognize the playbook happening in real time in the United States at the moment. And to them, what comes next is dead obvious: the current administration will make its move to consolidate power down into a one party state this year. (Akin to 1933.)

I hope that doesn’t happen and I know that I can’t do anything about it beyond learn more about history so that I feel less surprised when people’s behaviour repeats itself. I’m already familiar with the societal side of events when a fascist style of governance takes over, so now I would like to familiarize myself with how the stock markets and economies (domestic & global) have a history of / pattern of behaving when a formerly democratic government consolidates power.

Have you come across any good articles that cover this topic?

Thank you,

Sandra

Q: Hi 5i,

With the recent big run up and huge embedded gains in gold/silver does it make sense to even consider investing in these precious metals at this time?